Read the May 19 issue online

Niches beyond Tui's wildest dreams

When Tui Group sells its 50 Specialist Group brands later this year, it will undo a decade’s work by former chief executive Peter Long who oversaw their gradual acquisition.

Anyone passionate about travel couldn’t help but admire some of the diverse brands within the group – from gorgeous polar specialist Quark Expeditions and exclusive yacht charter company The Moorings to the much-loved Citalia.

More importantly, Long clearly saw the value in owning brands which appealed to a more discerning consumer, outside the low margins of bucket-and-spade.

Mainstream is a volatile marketplace in 2016, and it would seem as sound a strategy now as ever to maintain a wide portfolio, operating in different niches, and appealing to different customers. And there’s still more margin to made in canal boating and safari holidays than there is in fly-and-flop, however ‘differentiated’ that beach resort might be.

And yet, delivering only €39 million profit on turnover of €1.8 billion last year, it’s easy to see why the Specialist Group’s numbers simply didn’t add up for the Tui board.

Whoever acquires the newly-named Travelopia collection will also inherit the barriers that held Tui back from making it more profitable, with many of the brands operating almost independently, with their own IT and systems.

Greater shared services may be part of a prospective buyer’s game-plan for Travelopia (unless, of course, a private equity firm believes it can turn a greater profit by splitting the group up and selling it off piecemeal).

Many independent agents have steadfastly refused to sell any brand aligned with Tui in recent years, so it will be interesting to see how quickly they can be turned on to some of Travelopia’s diverse, quality brands.

It’s something Neilson has managed very successfully, winning Specialist Operator of the Year at the TTG Awards last September, having recently departed the Thomas Cook Group.

So whether or not Peter Long would approve, Tui’s loss could be the independent retail agent’s gain. And the sale will surely leave Tui Group more streamlined and financially richer - if a little less diverse.